Several years ago, Nobel Prize-winning economist Paul Krugman wrote a characteristically lucid piece titled “A Country is Not a Company,” in which he warned against the growing tendency of business leaders turned policy thinkers to conflate corporate strategy with national economic policymaking. He cautioned that running a country’s economy requires a very different kind of imagination and skill set than running a company’s balance sheet. CEOs, he argued, no matter how visionary in their boardrooms, are ill-suited to design economic policy on the national or international scale.
Little did anyone envision, perhaps not even Krugman himself, that an article written in 1996—before the dot-com boom, before the worldwide financial crisis emanating from the U.S. in 2008, before the digitalisation of economies and the rise of China—would echo with such compelling force nearly three decades later. It is almost prophetic how relevant his core message has become in today’s era of aggressive politics, populist economics, and escalating trade wars disguised as national rejuvenation strategies.
The monopoly mindset and its limits
Modern economic history is replete with examples of firms that have enjoyed—and abused—unfettered monopoly power. Since the turn of the 20th century, from the titanic influence of Standard Oil and U.S. Steel to the computational dominance of IBM and Microsoft, and more recently, the uninhibited ambitions of Big Tech firms like Google, Amazon, Meta and Apple, we’ve seen a recurring pattern. Market power—when left unchecked—tends to gravitate toward exclusionary behaviour. Whether through bundling, predatory pricing, exclusive dealing arrangements, or the acquisition of potential competitors, the tactics may differ, but the goal remains the same: to entrench dominance and eliminate competition. These strategies, though rational from a firm’s perspective, are inimical to competition and harmful to innovation on a national scale.
The dynamic of a zero-sum game, while accurate from a firm’s viewpoint, is the very antithesis of international engagement. One firm gains at the expense of another. Market share maximisation involves carving a larger slice of the GDP cake for oneself. Regulation in such an environment becomes not just necessary but vital. Anti-trust actions—think of the recent digital competition bills—are designed to maintain the integrity of firms playing the competition game. Firms and regulators are locked in a perpetual arms race, a cat-and-mouse game as old as capitalism itself.
Creative destruction, à la Schumpeter, sometimes helps topple giants. Netscape fell to Internet Explorer, which gave way to Chrome; MySpace vanished with Facebook’s arrival. But these rare episodes do not obviate the need for regulatory oversight. The Chicago School’s once-popular dogma of letting markets self-correct is an outdated prescription in a world where trillion-dollar valuations make correction unlikely—but potentially destructive.
